Insurance_automobile_UM and medical expenses payments--collateral source rule_policy
controls
An insurance company which issued an automobile policy with medical and uninsured
motorist (UM) coverage was entitled to a credit against the amount due under the UM coverage
for the amount it had paid for medical expenses. The Financial Responsibility Act does not
contain language controlling duplicate compensation under UM and medical payments coverage,
so that the policy controls. This policy expressly provides that defendant's liability under UM
coverage is excess to its medical payments coverage and shall not duplicate medical expense
payments.
Bryce Thomas & Associates, by Bryce O. Thomas, Jr., for
plaintiff-appellee.
Wallace, Morris & Barwick, P.A., by P.C. Barwick, Jr., for
defendant-appellant.
STEELMAN, Judge.
On 19 October 1999, plaintiff was injured in an automobile
accident involving a vehicle driven by an uninsured motorist. At
the time of the accident, plaintiff and her husband were insured
under a policy issued by Allstate Indemnity Company (“defendant” or
“Allstate”).
In its policy with plaintiff, defendant agreed to “pay
reasonable expenses incurred for necessary medical and funeral
services because of bodily injury: 1. Caused by accident; and 2.
Sustained by an insured.” The uninsured motorist (“UM”) coverage
in plaintiff's Allstate policy provided that “[t]his coverage isexcess over and shall not duplicate any amount paid or payable
under Part B [the medical payments coverage].” The medical
payments coverage contained a “non-duplication” provision stating
that “[n]o person for whom medical expenses are payable under this
coverage shall be paid more than once for the same medical expense
under this or similar vehicle insurance....”
Pursuant to the policy, defendant paid $1,000.00 under the
medical payments coverage toward plaintiff's total medical expenses
incurred as a result of the accident. Plaintiff then demanded
arbitration, as permitted by the terms of her policy, to determine
the amount of her expenses for which defendant was liable. The
arbitrator awarded plaintiff total damages, including reimbursement
for medical expenses, in the amount of $9,000.00.
Defendant paid an additional $8,000.00 pursuant to plaintiff's
UM coverage, contending it was entitled to a credit against the
total amount awarded by the arbitrator for the $1,000.00 it had
previously paid to plaintiff for medical expenses. Plaintiff then
filed a complaint seeking a determination of defendant's right to
a credit under the medical payments coverage of her policy.
Plaintiff filed motions for judgment on the pleadings and
summary judgment, and defendant moved for summary judgment. The
trial court entered a judgment in plaintiff's favor, concluding
that the provisions of plaintiff's Allstate policy violated the
collateral source rule and N.C. Gen. Stat. § 20-279.21 (2001).
In its sole assignment of error, defendant argues the trial
court erred in finding that it was not entitled to a credit against
sums due under the UM provisions for the amount it had previouslypaid pursuant to plaintiff's medical payments coverage.
Medical payments coverage is not statutorily mandated, nor is
it discussed in the Financial Responsibility Act (“Act”), N.C. Gen.
Stat. Chapter 20, Article 9A (2001). In the absence of an
applicable provision in the Act, an insurer's liability is measured
in terms of the policy as written. Younts v. State Farm Mut. Auto.
Ins. Co., 281 N.C. 582, 189 S.E.2d 137 (1972). N.C. Gen. Stat. §
20-279.21 of the Act does not contain any language controlling the
issue presented in the instant case as to duplication of
compensation under UM coverage and medical payments coverage.
Therefore, we examine plaintiff's policy to determine whether
defendant is entitled to a credit against its total liability as
claimed in this appeal.
Plaintiff's policy expressly provides that defendant's
liability under UM coverage is excess over its liability under
medical payments coverage and shall not duplicate payments for
medical expenses. Pursuant to the policy provisions, defendant
would be entitled to a credit for the $1,000.00 it had previously
paid plaintiff for her medical expenses.
Plaintiff argues that this Court's decision in Muscatell v.
Muscatell, 145 N.C. App. 198, 550 S.E.2d 836, disc. review denied,
354 N.C. 364, 556 S.E.2d 574 (2001), precludes a credit for
defendant. In Muscatell, the plaintiff was a passenger in her
husband's vehicle and was injured in an accident with another
vehicle driven by defendant Ysteboe. Muscatell, 145 N.C. App. at
199, 550 S.E.2d at 837. Plaintiff was reimbursed for her medical
expenses under the medical payments coverage of the insurancepolicy issued to her and her husband, defendant Muscatell. Id.
The trial court found plaintiff was injured by both defendants'
negligence and ordered both defendants jointly and severally liable
for the amount of the judgment. Id. at 199-200, 550 S.E.2d at 837.
The trial court also granted defendant Muscatell a credit in the
amount of plaintiff's medical expenses reimbursed by the carrier on
their joint insurance policy. Id. at 200, 550 S.E.2d at 837.
Defendant Ysteboe appealed the ruling that he was not entitled to
a credit for the amount plaintiff received under her medical
payments coverage. Id.
The Muscatell Court first concluded that since plaintiff's
medical expenses were paid pursuant to her insurer's contractual
obligation under the medical payments coverage of her own policy,
rather than under defendant Ysteboe's liability coverage, the
payment did not raise an issue of double compensation. Id.
However, this Court determined that the case did raise an issue
under the collateral source rule. Id. at 201, 550 S.E.2d at 837.
This rule seeks to prevent a tortfeasor from “'reduc[ing] his own
liability for damages by the amount of compensation the injured
party receives from an independent source.'” Id. at 201, 550
S.E.2d at 837-38 (quoting Fisher v. Thompson, 50 N.C. App. 724,
731, 275 S.E.2d 507, 513 (1981)). Based on the collateral source
rule, Muscatell held that neither defendant was entitled to a
credit for the medical coverage payments. Id. at 201, 550 S.E.2d
at 838.
In the instant case, defendant is not trying to reduce the
amount of its liability, since it has paid a total of $9,000.00 toplaintiff, the full amount awarded by the arbitrator. Nor is the
source in this case “independent” because both the medical expenses
payment and the UM payment come from defendant. Further, Muscatell
concerned payments under liability and medical payments coverages,
rather than UM and medical payments coverages at issue here. The
Muscatell Court did not discuss the policy language or whether the
policy included express language barring double compensation under
the applicable coverages.
The issue of double compensation under the same insurance
policy has been addressed by our Supreme Court in two cases: Tart
v. Register, 257 N.C. 161, 125 S.E.2d 754 (1962), and Baxley v.
Nationwide Mut. Ins. Co., 334 N.C. 1, 430 S.E.2d 895 (1993), appeal
after remand, 115 N.C. App. 718, 446 S.E.2d 597 (1994). In Tart,
plaintiffs Tart and Flowers were injured in an automobile collision
while passengers in a vehicle driven by defendant. Tart, 257 N.C.
at 164, 125 S.E.2d at 756. Following a jury verdict awarding
damages to each plaintiff, defendant asserted that she was
entitled to a credit against the verdict in favor of Flowers for
payments previously made to Flowers under the medical payments
provisions of defendant's insurance policy. Id. at 172, 125 S.E.2d
at 763. The Tart Court concluded:
If double recovery can be had when [the
defendant] is insured, it is not by reason of
one claim sounding in tort and the other in
contract, as suggested, but solely by reason
of the provisions of the insurance contract.
In our opinion it was not within the
contemplation of the contracting parties that
there should be a double recovery of medical
expenses....It is manifestly inequitable for
plaintiff to recover twice against the same
defendant, even though payment was in part
voluntary.
Id. at 174, 125 S.E.2d at 764 (emphasis added).
In Baxley, the plaintiff was awarded damages under both the
underinsured motorist (“UIM”) coverage and medical payments
provisions of her policy, and her insurer sought a credit for the
medical expenses it had paid to the plaintiff. Baxley, 334 N.C. at
11-12, 430 S.E.2d at 902. The policy expressly permitted recovery
under both of these sections and did not contain a provision for a
credit under medical payments coverage. Id. at 13, 430 S.E.2d at
902. The Baxley Court held that the express provisions of the
insurance policy controlled the question of whether the insurer was
entitled to a credit for sums paid under the medical payments
coverage against the UIM claim, and, therefore, the insurer was not
entitled to a credit. Id. at 14, 430 S.E.2d at 903; see also,
Aills v. Nationwide Mut. Ins. Co., 88 N.C. App. 595, 363 S.E.2d 880
(1988) (holding that the language of the insurance policy
determines the rights of the parties).
We find that this case is controlled by Baxley and that
Muscatell is distinguishable from the instant case. Thus, based on
the reasoning in Baxley, the express language in plaintiff's
Allstate policy that its UM coverage was in excess of and shall not
duplicate payments made under the medical payments coverage
entitles defendant to a credit for the $1,000.00 it previously paid
plaintiff in medical expenses. We remand this matter for entry of
judgment in accordance with this decision.
REVERSED AND REMANDED.
Judges TIMMONS-GOODSON and HUDSON concur.
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